Tax the Imagination, Not the People

By Ken Lizotte

Innovators & Entrepreneurs, May 2022

Can we learn anything about business success, or better yet about life, from the world of politics? One would presume not, given the seeming vast gulf between these realms. Yet perhaps this personal tale of a challenge I undertook decades ago might shed some light on how independent actuaries (and entrepreneurs in other corners of business) might adopt a refreshing perspective that advances, or even transforms, their current actuarial practice’s trajectory:

My story took shape back in 1971, on the date of my 23rd birthday, just a year out of college, when I announced my candidacy for mayor of my hometown Marlborough, Massachusetts. The idea was not to begin a personal political career, despite having recently earned a Political Science degree. Instead, I was doing this to save my hometown from self-destruction.

A few months earlier my friend Ron, like me also born and raised in Marlborough, had been decrying a disconcerting, escalating trend of our city government wooing builders of factories, warehouses, office parks, condominium complexes and mini-malls in return for needed tax revenues. The downside was the uprooting of apple orchards, meadows, farms, and forests to be replaced with bland or gaudy commercial structures plunked down willy-nilly all over town. “If we don’t stop this soon,” Ron kept insisting, “Marlborough is not going to exist anymore.”

Ron seemed overly dramatic to me at first, i.e., that our hometown would literally cease to exist, but after a while I began to grasp what he was getting at. The rural, bucolic setting we had always known and loved as children was in danger of disappearing forever. Instead, Marlborough would become one more debilitating suburban crawl.

But what could we do about it? One day, Ron had a daunting solution: “We have to run you for mayor.” He explained that my Poli Sci degree and experience running for offices in high school and college, even if admittedly limited and amateurish, made me a more logical choice than he to take this on. Also, at 6’ 3” I was much taller than Ron plus two years older. End of discussion!

A student activist at Stonehill College in the era of protests against Vietnam, corporate capitalism and racial segregation and support for feminism, environmentalism, gay rights and more, I nonetheless recoiled at Ron’s “nomination.” How would my running for the city’s top elective office, a campaign I surely could not win, save the day?

Moreover, young activists like us at that time had pretty much soured on the notion that the key to solving societal problems rested with elected officials in the first place. Democrat or Republican, liberal or conservative, our elected representatives seemed always to be promising hopeful change and speechifying about what they would do about it, then letting us down with a lack of follow-up action.

And I had another objection as well. "If running for mayor means I’ll be out there campaigning all by myself while you sit off on the sidelines just cheering me on, forget it,” I told Ron. “I’ll do this only if you and our other friends campaign alongside me from now until Election Day,” adding, “You need to go out and gather signatures for my nomination papers without any help from me, then file them with the city clerk, and get them certified. Do all of that and I’ll agree to this.”

Ron said OK although a part of me did not believe him. People were so often all talk and no action, just like the politicians. Yet a few days later, he and a mutual friend Deborah showed up at my house to report, “We did it. We collected enough signatures for the city clerk to review and approve. You’re going to be on the ballot.”

A week or so later, two more native Marlboroughites, Pete, a throwback to nature-loving Henry David Thoreau, and my brother Ed, a finance whiz-kid, joined Deborah, a feminist pioneer and Ron, the hippie inspiration of it all, to comprise what turned out to be a twentysomething “gang of five.” Cutting my shoulder-length hair, planning to dress in jacket-and-tie (vs. bellbottoms and Army surplus jacket) as well as labeling myself as an “alternative” candidate (thus shedding the term “radical”), I joined my novel campaign team throughout the spring of 1971 for hours-long skull sessions every Saturday, dissecting the city’s issues and brainstorming what we could do about them. Scant knowledge of the most basic governing procedures and assumptions forced us to augment these meetings with homework into matters most older citizens already took for granted. Clearly we had a lot of catching up to do.

The good news here was that our naivete freed our minds to percolate unbridled ideas. So, starting with the usual election year top issue, we tackled the question of whether or not to raise taxes which on the local level meant raising not taxes per se but the tax rate. This distinction had over centuries given rise to a belief that a wise thing for cities and towns to do is to entice builders to come in and construct structures, i.e., property, since the result would be to increase tax revenues and thus decrease everyone’s tax bills. Farmland, apple orchards, open fields relied less, or not at all, on taxable structures, making even the gobbling up of nature logical and fiscally sound. Issues of harm to the environment or aesthetics rarely entered the picture.

It soon became clear to us that the chief purpose of our campaign was less a matter of winning and more about educating our fellow citizens to alternative ways of thinking. We had to find a way to make them aware of why things worked the way they did and what, if anything, was wrong about that. Only this way would change occur for the better, with people making choices based on facts.

After much in-depth exploration, e.g., reading books and research papers, talking to tax experts and economists, and dialoguing at our meetings, we came up with a drastic position: Abolish the property tax! Property taxation had made sense back when 90 percent of taxpayers owned a farm and attendant barns, chicken coops, storage sheds, etc. Back then farming had produced personal income for virtually every taxpayer. Today however, over 90 percent of taxpayers earned their income from a job.

My own uncle Alfred “Red” Lizotte, for example, operated a farm in Marlborough in 1971, making his living selling milk and eggs all over town, with additional income from his popular summer ice cream stand. But Uncle Red had by then become an anomaly as his seven siblings, my father included, worked all their lives instead in shoe factories, machine shops, medical offices, restaurants, and retail stores. None of their incomes derived from owning or operating a farm, so by now shouldn’t local taxation systems reflect that?

Thus, we proposed replacing the property tax system with a city income tax, an idea so totally out-of-the-box that it blew the lid off the automatic perennial debate over whether the current property tax rate should be raised or lowered. My three opponents—two sitting city councilors-at-large and the incumbent mayor—were, as a result, dumbfounded. Get rid of the property tax? Huh, what, say again?

Extending such alternative thinking to the other issues, we next embraced a growing local demand for constructing a new high school due to increasing student enrollments. Voters who objected feared the 3-million-dollar price tag (estimated $126-150 million in today’s dollars) would cost “way too much!” Others demanded that education be given a pass from worries over exorbitant costs because “education must come first.” Could my gang of five also determine a workable, remarkable option to this age-old stalemate too?

Hitting the books, articles, and other research again, we absorbed all we could about emerging school designs and building innovations. Aided as well by an unexpected but serendipitous chat in a Boston coffee shop with an astute, progressive architectural student, Ron and I learned of trends in the construction industry that allowed traditionally static concrete walls to be replaced by movable ones. Though quite common now, in 1971 few had heard of this development and its capacity to literally upsize or downsize a school or office building without adding new construction. Rooms could be expanded or contracted as student or employee populations rose or fell, eliminating the need to erect expensive new facilities every few decades. Best of it all the price tag for a new Marlborough High School constructed with this technology came in precisely halfway at $1.5 million (estimated $60-75 million in today’s dollars), making its ultimate cost acceptable to all sides.

By the time I announced my candidacy in June, our deliberations had applied this imagineering process to every possible issue: Government accountability, urban renewal, protecting the grass on Marlborough Common and even doggie leash laws, etc. Another thumbs up or thumbs down issue involved whether or not to issue city bonds to build a new trash incinerator, to which we rejoined: What about a recycling center instead? The reaction from our opponents, again, was blank stares.

Our bumper stickers, extolling this brand of fresh thinking blared “Tax the Imagination, Not the People.” The nearby Worcester Telegram-Gazette took notice, crowning our slogan the best of all the campaigns that year in Central Massachusetts. Our most unlikely effort was off and running with a creative, yet pragmatic bang.

How did it all end? Well, I didn’t win the mayoralty despite our giving the campaign everything we had: Canvassing door-to-door, delivering street corner speeches, wowing the audience at the mandatory League of Women Voters debate … even campaigning at the town dump! On Election Day, my 12.4 percent of the vote was deemed a success given my neophyte status though perhaps not totally surprising in a year when the incumbent mayor also lost the primary. For months afterward in fact, voters of all ages would stop me on Main Street to say how much they liked my ideas and wished they had voted for me. A few admitted that, though it was hard to pull the voting lever for a 23-year-old “kid” running for mayor … they had done it!

Fast forward to 2022: How much of our “tax the imagination” mindset has left a stamp on society at large? Well, the property tax is still the taxation of record for 99 percent of America’s cities and towns despite its lack of logic, so Ron apparently predicted correctly. Our hometown is now an ugly jumble of mini-malls and office parks, many of them plunked down atop what had formerly been fragrant pine forests and cider-sweet orchards. However, novel architecture techniques abound today alongside environmental standards and protections as do many other progressive solutions we had conceived.

So, was our approach fatally flawed? The answer is contained in our slogan’s second half: “Not the People.” This precept insists that first and foremost people should not be taxed at all without first seeking a better way. The word “tax” doesn’t refer only to taxation in dollars but to the dictionary definition as well: “A burdensome charge, obligation, duty, or demand.” So, if our first three words declare the possibility of brighter, more resourceful futures, the last three insist that honorable values should be part and parcel of such pursuits as well.

In other words, by ignoring our slogan’s second admonition, we destroy the intrinsic value of the first. The full statement must be lived, not just a piece of it. The bottom line for us entrepreneurs and actuarial practitioners is perhaps a slight modification: Tax the Imagination, Not Your Customers. Find creative ways to serve them without adding to their struggles or “taxing” them more than necessary.

By proceeding this way, bells of responsiveness and true value can ring throughout the land.

Statements of fact and opinions expressed herein are those of the individual authors and are not necessarily those of the Society of Actuaries, the newsletter editors, or the respective authors’ employers.

Ken Lizotte, CMC, is author of eight books and chief imaginative officer (CIO) of emerson consulting group inc. which transforms entrepreneurs and business experts into published thoughtleaders. His website is www.thoughtleading.com.